Shares declined over 8% on Friday, their worst intraday performance in four months.
Amazon.com Inc. (AMZN) shares climbed 1.4% in premarket trading Monday, bouncing back from Friday’s sharp decline sparked by quarterly results that raised concerns over slower growth in its cloud business.
On Stocktwits, sentiment around the stock has stayed in the “extremely bullish” zone since late Thursday, with recent user posts indicating a strong intent among retail investors to increase their Amazon holdings.
“I’m buying more (Amazon shares) on Monday,” a user said, forecasting that the stock should rise over $300. “Nice discount for a quality stock,” another said.
Amazon reported its second-quarter results after the market closed on Thursday. Although its revenue and profit, as well as its forecast for Q3 sales, exceeded Wall Street expectations, investors noted weakness in its Amazon Web Services (AWS) unit.
AWS reported a 17.5% rise in sales, exceeding Wall Street expectations, but investors were unimpressed when compared to the 39% and 32% growth rates for cloud units reported by Microsoft (MSFT) and Google (GOOGL), respectively.
To be sure, AWS is the biggest hyperscaler cloud vendor in the market. Amazon CEO Andy Jassy said, “The second player is about 65% of the size of AWS.”
Wall Street was also concerned with shrinking margins. AWS’s margins in the quarter came in at 32.9%, down from 39.5% in the first quarter of this year and 35.5% a year ago. The latest figure is the lowest level since the final quarter of 2023.
The management’s commentary regarding AWS did little to alleviate investor fears that AWS may have a larger structural issue in capturing its fair share of the growth from AI, according to a post-earnings note from RBC Capital Markets, as reported by The Fly.
AMZN shares dropped 8.3% on Friday, their steepest intraday drop in four months. So far this year, the stock is down 2.1%, compared to the 6.1% rise in the SPDR S&P 500 ETF (SPY), which tracks the benchmark S&P 500 stocks.
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